soooo.. punters went from the place where qe ended to the place where qe is starting, because they think qe makes equity prices go up, which is does because they go to the places where its starting...sprry - u may have to use words after all MM!

The Dax is for people who want some European exposure, but don't actually want any exposure to Europe - call it the 'just the tip' trade.

Fine; that's step one. But if we believe in the European cyclical story, the junior tranches of the European CDO should start to outperform; heck, even the equity tranche (Greece) may be worth a flutter.

On top of the cyclical tailwinds, one should note that with the peripheral rally even more impressive than the Bund, the asset allocation decision in these countries is even starker than in the core.

Dax is something of a mania, but with Europe simply rebounding from an epochal low vs US equities reached in January, I think we're only in the first innings of European outperformance.

Everything is aligned for the European earnings cycle to turn up quite nicely. People are kvetching about PE's, but really, you need to take a view on the earnings cycle - moaning about PE's is inherently ridiculous, and would have missed you a huge chunk of the US rally. On cyclical earnings, Europe looks quite attractive, especially the more 'European' you get.

Of course, Europe being Europe, the occasional plot twist and cliffhanger is considered obligatory.

@washup, that has taken me back to an earlier analogy I had about QE, why is that the leading trainer for the year had the most favorites pre-post..was b/c he/she had the most runners therefore the law of frequency kicks in , or was it based on true form for each individual runner. There was an underlying bias found in a study I once read towards leading trainers fav/runners over the course of a year and it displayed a unique way of deciphering this..but was plausible, no doubt.

Inexperienced and lacking in the judgement required to handle establishment propaganda - certainly. But nobody who has known Varoufakis or followed his writings over the years would consider him 'mad'. Neither does he lack integrity.

For quite a while we've heard the bund is trading where it is because its some kind of call option on DEM in a post EUR world. But what does that make the DAX? I have no skin in this game (yet) but don't see the value in DAX here. If you are playing the high-probability TWINE trade there are better values in "real" Europe than chasing DAI (350+ dax points in the last 6 months) et al up 50%+ in 6 months and the rest of the DAX bloat.

I do wish the right-wing anons would use a handle, it's so much easier to imagine them sitting there with one eye on Faux Business News, an ear open to Rush Limbaugh, while waving little Bavarian flags to cheer on the CDU/CSU as they crush Greece under their Fourth Reich jackboots, reminiscing about the glory days of past military dictatorships and leafing through their well-thumbed Sarah Palin mags... :-)

Agree with Mr T and Vandals, don't short the DAX as it heads to the sky, but surely there are even better TWINE values and larger gains to come out in the periphery, where 5-10 year money is almost as cheap as it is in the core (Greece excepted for the time being, until the public floggings from Herr Schäuble cease).

Yep, agree on the Dax. It is pretty amazing to see this thing hold up given the ugly price action elsewhere. A classic, and nasty head fake in Spoos et al yesterday given today's countermove!

Oh and don't mention Brazil, just don't ;). The dollar seems to be setting up for 105 here with all the associated pain in derivative trade that entails. With oil cruising towards new lows that is a really nasty little combination for the commodity complex. The Fed will be at 2.0% at this time next year, and maybe big Sam will be in the CL semis too ;).

Good point on the periphery LB, the Dax is difficult to chase here, but selected turds in the periphery are probably still suitably attractive for a catch-up play.

Hey guys, how serious do you think this EM and EM corporate dollar denominated debt "risk" might actually be? Just wondering because in random occurences come across with this mentioned as a potential future negative black swan. I'm thinking that weaker local currency will make it harder to pay them off/roll forward the dollar debt and the broad commodity complex isn't very supportive for the core economy either. Are we going to start getting bodies floating to the surface in various random places?

I also read mentions that China might have to eventually start their own QE because the relatively strong local currency. I suppose the theory was that when they are trying to transform to the consumer driven economy from investment driven, as they shrink they still need to export stuff to support this transformation. But as it stands FX support (relatively strong currency) for exports might diminish too quickly and as such the total economy might decline much too rapidly resulting in an unnecessarily "hard landing". Not something the Party would like I imagine.

I haven't posted much recently as I have the attention span of a flea and it's all rather same old...

But I agree entirely with washedup et al above: "punters went from the place where qe ended to the place where qe is starting". Indeed.

BOJ QQE: We see the Nikkei up +200pts in the Asian session ECB PSPP(QE): We see Dax up +200pts todayFed nothing: We see Dow down -200pts

Ofc QE doesn't drive asset price inflation & grossly distort price discovery. I know because the learned central bankers told me so... I also know they'll increase rates, because they told me that too. Wait... Carney's on the phone telling me that the BoE rate hike may be postponed due to possible April showers. That just leaves the Fed to hike while the USD goes parabolic and everybody else eases. As an American friend of mine likes to say, "Good luck with that".

One day we'll look back on this era of funny money and think "WTF????" Maybe we already do.

welcome back FM - what are u thinking on this spoo flu? u think we see a 1900 handle before the BTFD re-commences?

@hipper I think the floating bodies phenomenon is a few months away, but quite inevitable - I expect many false dawns and empty promises in our future - as for china, in the best case it has nothing but bad choices, and in the worst case, is utterly f@#ed.

Whoever said markets stay calm way longer than you thought possible, and then turn violent way faster than you thought possible, was on to something.

@washedup - Thank you. I'm rather enjoying the spoo flu (& although in hindsight I took profits on some equity positions too early, it was why I did). In answer to your question, I'll be watching 1980-2000 on the S&P first (re-test of the previous lows). If that goes, it'll be interesting.

Among other things, I'm also watching cable. Technically, we're looking a little oversold here, and yet the price action this week has been v bearish. When this finally snaps back it'll be fun.

thx FM - y cable's been usain bolt on ephedrine last 3 days - kinda hazardous to its own health and others' - y I'm kinda watching 1995-2000 on spx too, though in a nod to the obvious similarities with 1999, kinda have to think the next leg up, if any, may be driven by nasdaq trying to retake 5k - can't get this far without trying a few times rt.One day at a time.

USD does seem to be in blow-off phase. Wonder how steeply parabolic the Happy Ending will be. Steamrollers are best viewed from a distance, preferably from a POV that is perpendicular to the direction of steamrolling.

About EM debt, we all know that these things do occur from time to time and they are often associated with strong USD. A lot of that will have been priced in at this point. However defaults usually also occur in places where, if you thought about it, they are not unexpected.

In other words, sovereigns with minimal national debt (Russia) and current account surpluses (China) are less likely to be at risk than obvious basket cases with hyperinflation and currency crises (Venezuela, Ukraine). Managers of EM debt funds (as with managers of muni funds, cough: Puerto Rico) usually have the wit to avoid the turds.

EM banking system debt defaults, on the other hand, depend on a melange of factors, including leverage, regulatory environment and the incidence of fraud. So these can never be ruled out, and we all worry about China, maybe Brazil and India to some extent. But these can pop up anywhere.

Just curious, how long do people here think it will be before the first major oil producer or OPEC makes noises about decreasing production? We know that falling US rig counts will eventually impact US supply, although we may not feel that for a while? Will the Saudis lose their patience, or some other producer with fairly deep pockets? It seems as though we can forget about Nigeria and a few others to get the ball rolling....

But I am going to just sit on it and wonder if Dame Janet will put more pressure next week. Depending on what the magnitude resulting from the disappearing "patient" I might go and add some more. The play here is that any future soft patch of US data might relieve that pressure on EM/commodities through Bucky somewhat I think and eventually EZ QE will leak out from its constraining box somewhere again yield hungry as always. EZ equities have already had a nice pre-frontrun and the earnings forecasts there aren't really that great anyway so...

the supposed knowledge from articles I read during the previous panic peak of oil, there was a common suggestion that most OPEC countries have a significantly smaller cash cost breakeven for a barrel of oil than most/all/significant portion of the fracking industry . That's why I'd think it doesn't make any sense for any OPEC country to reduce production as long as this is true, because someone else would just take their place in the supply chain and the only thing that would happen is that they will loose even that little amount of money they were producing for the coffers.

On this issue I'd believe the Saudi prince that some while ago said that Saudis weren't the cause of this situation and as such, Saudis won't react anyway to it, but just go on with business as usual. I don't think any other OPEC country will either.

The companies need cash flow... they will keep pumping come hell or high water.

U.S. Energy Information Administration:August 2014 8.7 million barrels of US production daily (before prices dropped)Predicts:9.3 million barrels a day in 20159.5 million barrels in 2016 9.6 million barrels a day in 2017

Storage is filling up> and if interest rates rise, then storage costs rise, forcing more oil into the market.

"The Hellenic fleet is the world’s most valuable at $106 billion, accounting for 19 percent of the world’s tankers."

"Greeks have long dominated the shipping business. The nation’s fleet, numbering 3,669 vessels in 2013, is the largest in the world, making up more than 7 percent of the Greek economy and providing 192,000 jobs in 2013."

"Their success in one of the most global industries stands in contrast to their country’s domestic troubles, where 36 percent of the population was at risk of poverty or exclusion from social benefits at the end of 2013."

"The industry pays no tax on international earnings brought into the country under rules incorporated in Greece’s constitution in 1967."

Jeff's zervos was calling that dax trade since the latter part of 2014, I posted a few of the muesings. Gotta give it to that guy

But when you look at whats leading the outperformance, its not the banks, its the German autos. I'd watch that space closely if I were balls long dax, which unfortunatly I am not. Trading the damn thing has been very tough for me at least. Best play was just buy and hold.

abee - i noticed the same divergence german autos vs banks- y its been the perfect (good) storm for das autos - lower fuel prices plus lower currency plus continued rotation into luxury - unlike the japanese carmakers they also benefit from a lower degree of supply diversification - as for banks, someone posted here that ECB would have to really go out the curve to meet expansion goals, which to me is a recipe for major curve flattening, not good for banks, who may also find it difficult to buy back stock at these lower yields, given capital issues - lastly, grexit may be off the front pages but not clear to me at all its permanently solved.

I dont really follow the german auto sector , but i just think it will become of increasing importance. Yes the fundi's may be good, but if someone misses or gives bad guidance, it could set off a big drop... Or then again it could be like the US, where rotation has killed most active managers as leaders constantly switch yet the trend stays remarkably strong.

Re the Auto sector, one interesting detail worth noting is that the fortunes of the European car industry could well be decided closer to home this year. The level of new car regs is still below 1994 levels in both the core and the periphery.

This provides a very low base for improvement. New car regs in the periphery are growing at +10% y/y, though, and I think they could accelerate further.

It could be a dark horse for earnings even if Chinese buyers etc are saturated.

“Once a quarter, we press a button,’’ Dorsey says. The Focus 5 algorithm then generates a list of investments, and First Trust Portfolios, his partner company, executes them. Otherwise, they don’t meddle with the robot. “We just need someone to press the button.’’